Will the California damage Ferrari?

Ferrari has had a wonderful 10 years. Riding the back of a benign world economy, it has doubled the number of cars it sells to over 6,000 a year, and sales have risen to over €1.6 billion. The biggest success by far has been the 360/430, which easily accounts for the lion’s share of the sales.

But times are hard for car makers at this level, and Ferrari has seen a decline in its sales, whatever the company may say publicly. But there is a light for Ferrari, in the guise of the new Ferrari California, for which they claim a full order book through to 2011. But is the California a shining beacon or a poisoned chalice?

Ferrari Califonia - Ferraris cheapest car

Ferrari California - Ferrari's cheapest car

Ferrari like to think that their customers are special. Real car lovers. Aficionados of the marque who cherish and relish all that Ferrari stands for. But the truth is more prosaic. Yes, there is a band of real Ferrari nuts with the bank balance to indulge their obsession. These are the buyers that delight in the Ferrari 599, or would buy the 612 Scaglietti if they need more space, rather than a Bentley GT Speed or an Aston Martin DB9. Money is no object and Ferrari is the Holy Grail.

But buyers like this are few and far between. Most people buy the Ferrari F430 for one simple reason. It is the cheapest Ferrari. They want the flash without spending any more cash than they have to. So they buy the F430. But not any more.

Order books for the Ferrari California are healthy not because Ferrari is stealing orders from Mercedes or Porsche, which is their aim, but because it is the cheapest Ferrari. And it’s a good car. But the order book for the F430 is falling apart as people desert it in droves.

So what does this mean for Ferrari. They are planning a F430 replacement (which will probably be the Ferrari F480), but what market will it have? Probably a very small one, from the wealthy Ferrari aficionados who want the magic of a mid-engined Ferrari. But that potential buyer is very small in numbers, and potentially won’t be big enough to justify the model.

So could this be the end of Ferrari’s growth. Can it steal a whole new market from Porsche and Mercedes, and still see the F430/F480 sales continue to rise?

We think not. We think Ferrari has shot itself in the foot with the California. It will marginalise the F430 and make it another specialist Ferrari, just like the 599 and 612. Assuming the world economy recovers before too long, Ferrari will continue to succeed. But the only way they will make the profits they are used to is to push the F430 replacement up in price to something closer to the 599, and shove the California up to the price levels of the F430.

So if you want a California, buy one now. They will be going up in price very soon!